PayPal's partnership follows a similar deal with MasterCard's larger rival Visa Inc in July as the company looks to expand its payments network.
• As part of the deal, MasterCard will allow PayPal users to withdraw cash from their accounts using a debit card and also waive the digital wallet fee it currently charges PayPal.
• The two companies have an existing partnership for co-branded consumer credit cards in the United States and Puerto Rico.
• PayPal, spun off from e-commerce company eBay Inc last year, has focused on aggressive growth.
• The company's revenue in the second quarter rose more than 15 percent to $2.65 billion from a year earlier and the volume of payments it processes jumped 28 percent to $86.21 billion.
• PayPal is also in discussions with banks that issue cards, to explore new products and partnerships, the Journal report said, citing people familiar with the matter.